THE F-FACTOR Trend Briefing - May 2011

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trendwatching.com, independent and opinionated, is one of the worldʼs leading consumertrends ﬁrm, relying on a global network of hundreds of spotters. Our trends, examples andinsights are delivered to 160,000 business professionals in more than 180 countries.More information at www.trendwatching.com May 2011 | Amidst the avalanche of articles and insights on social commerce, we bring you THE F- FACTOR, which is all about how friends, fans & followers greatly inﬂuence consumers’ purchasing deci- sions in ever-more sophisticated ways. So much has been said about social media and the rise of social commerce as the new marketing fron- tier that we’re not going to (re)make the social case here. Instead, we’ll focus on how the inﬂuence of friends, fans, and followers on consumers’ purchasing decisions continues to become more sophisti- cated and thus more powerful. Let’s call it the F-FACTOR: THE F-FACTOR | Consumers are increasingly tapping into their networks of friends, fans, and followers to discover, discuss and purchase goods and services, in ever-more sophisticated ways. As a result, its never been more important for brands to make sure they too have the F-FACTOR. Why is the F-FACTOR important to consumers? It offers the promise of a consumption arena* that is more efﬁcient, more relevant, and more interesting than before, where consumers either had to spend endless time and effort on trying to discover the best of the best, or had to rely on sources that were distant, unknown or untrusted (read: brand-driven), and therefore potentially unreliable or irrelevant.You are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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Of course, consumption has always been social: people have And a couple of brand-related, F-FACTOR stats:forever been inﬂuenced by what those around them think andbuy. KellerFay, a US word of mouth marketing research consul- • Three quarters of Facebook users have Liked a brand.tancy, estimates that there are nearly one trillion conversations (Source: AdAge/ Ipsos, February 2011)about brands every year in the US alone. But, just as with somany consumer trends, while the core consumer behavior isn’t • Juicy Couture found that their product purchase conver-new, technological developments are unlocking new manifesta- sion rate increased by 160% after installing social shar-tions of that behavior, which here amplify its importance and im- ing features (Source: CreateTheGroup, February 2011)pact. Indeed, the F-FACTOR is being fueled by new tools andplatforms available to both consumers and brands, and by the • Incipio Technologies, a gadget accessory retailer, foundsheer numbers of people now using and contributing to these that referrals from Facebook had a conversion rate dou-tools. ble the average (Source: Business Insider, March 2011)Note: This Trend Brieﬁng focuses on the new ways consumers’ • But it’s not just about Facebook. Take for example thepurchasing decisions are being inﬂuenced by their friends, follow- explosive rise of the daily deal site Groupon, which useders and other people they “know”. For more on consumers who referrals from friends and colleagues to drive sales ofactually contribute, see our 11 Crucial Consumer Trends for over 40 million deals in the two and a half years since it2011, where we looked brieﬂy at the rise of SOCIAL-LITES, and launched in November 2008, via email ;-)the phenomenon of why consumers are increasingly becomingcurators; actively broadcasting, remixing, compiling, commenting,sharing and recommending their purchases and experiences toboth their friends and wider audiences. Hint: it’s it all to do withthe changing STATUSPHERE, as always ;-) So, here are just ﬁve of the ways that the F-FACTOR inﬂuences consumption behavior: 1. F-DISCOVERY: How consumers discover new products and services by relying on their social networks. 2. F-RATED: How consumers will increasingly (and auto- (Picture credit: 55His.com) matically) receive targeted ratings, recommendations and reviews from their social networks.Just a few recent stats demonstrating the reach and power of theF-FACTOR: 3. F-FEEDBACK: How consumers can ask their friends and followers to improve and validate their buying de- • The F-FACTOR is currently dominated by Facebook, as cisions. over 500 million active users spend over 700 billion minutes a month on the site. (Source: Facebook, April 4. F-TOGETHER: How shopping is becoming increasingly 2011) social, even when consumers and their peers are not physically together. • And its impact isn’t just on Facebook itself. Every month, more than 250 million people engage with Facebook 5. F-ME: How consumers’ social networks are literally across more than 2.5 million external websites. (Source: turned into products and services. Facebook, April 2011) * This Trend Brieﬁng is about the impact of consumers’ social • The average user clicks the ‘Like’ button 9 times each connections on how they ﬁnd, decide and purchase: i.e. what month. (Facebook, 2010) happens when consumption is increasingly social, rather than the personalized retailing opportunities on social networks (which isYou are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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currently still the main focus of F-COMMERCE). For more on thissee the excellent Social Commerce Today.One ﬁnal caveat: there are a whole host of ways in which con-sumers are inﬂuenced by other consumers, from collaborativeﬁltering and ‘social’ or collective intelligence models. But to tryand save this from turning into a book, this brieﬁng will focus onconsumers’ existing or explicit social networks. • Polyvore bills itself as ‘a community of tastemakers’, where users can clip products from around the web and compile them into virtual ‘looks’ or sets which can be shared across social networks. The site also features sets from brands and celebrities, with users able to fol- low, like and buy desired items. • Boutiques.com is a personalized shopping site from Google where users can establish their own collection of favorite items from around the web. • Users of Theﬁnd, the shopping search engine, can ‘Shop Like Friends’, and view their Facebook friends’ tastes and preferences. • A number of extensions make it increasingly easy for consumers to see exactly what their friends Like around the web: check out Likebutton.com, which shows users what their friends have liked across a num-Consumers’ ongoing obsession with owning or experiencing ber of the most popular sites, or LikeJournal, whichthe best of the best and their desire for serendipity, excitement, stores users and their friends likes.interaction and community, explains the pull of F-DISCOVERY.People are curious and interested in what their friends and con- • Belgian magazine Flair launched their fashiontag Face-tacts think, do, eat, read, listen to, drive in, travel to and buy, be- book app in March 2011. The app enables users to tagcause often this will be similar to how they want to think, act and photos of friends’ clothes and ask them where they hadbuy. bought them. Within a week, the magazine’s number of fans increased by 35%, from 17,000 to 23,000. (via Ad-No surprise then that consumers are embracing communities, Age)tools and apps that allow them to dive into and discover selec-tions from friends, fans, followers and so on. Just a few exam- • Kaboodle, Svpply, Fancy and Nuji all help users to dis-ples: cover new products from apparel to art that have been selected by fellow consumers. • Canadian shoppers can use ItSpot’s iPhone apps to discover what fellow shoppers nearby are buying. The apps cover a number of cities, and include details of local promotions as well as shopping tips from local Shoppingistas.You are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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• In November 2010, Gifts.com and Hunch joined forces • In April 2010, Levis was the ﬁrst big brand to integrate to create their GiftFinder app, which logs into Facebook its online store with Facebook, allowing shoppers to and suggests suitable gifts for friends based on the in- view which products their friends had ‘liked’, interact formation in their proﬁle pages. The company said the with them and create a like minded shopping experi- conversion rate was up to 60% higher than when users ence. were shown generic recommendations. • Facebook’s Instant Personalization project moves this beyond Facebook itself, by enabling users to have con- tent that their friends have liked or recommended high- lighted on other websites. Partner sites include local review site Yelp, music site Pandora, Microsoft’s search engine Bing and travel site Trip Advisor. The Trip Advi- sor tie in, launched in December 2010, means that visi- tors to the travel site who are logged into Facebook see their friends’ reviews ﬁrst, as well as being able toWhile consumers sometimes enjoy ﬁnding the best of the best quickly view which of their friends have been to particu-through discovery, they are increasingly able to access personal- lar cites. Friends can also message each other quicklyized recommendations and reviews on something they know they for additional travel tips.want to purchase. In fact, expect more and more sites to auto-matically serve up friends’ recommendations, ratings and re- • Amazon launched a feature in July 2010 that allowsviews* next to goods and services that people are researching. users to integrate their Facebook and Amazon accounts. The feature allows Amazon to connect through to a users social network and base recommendations upon the information found in his/her Facebook proﬁle. Moreover, the feature also informs users of friends mostYou are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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popular books, DVDs and musicians and also reminds them of birthdays and gift suggestions. • In February 2011, Microsoft’s Bing rolled out their "Liked Results" feature to all users. The update brings Face- book likes and search preferences of friends into the search engines algorithm. Over the last decade, online reviews have greatly empowered consumers (see TRANSPARENCY TRIUMPH). But anonymous reviews aren’t always what consumers need or want; they can lack relevance and context, and consumers with many options sometimes just want an unambiguous, or ﬁnite opinion. • Similarly, Google’s +1 feature, launched in March 2011, Which is where F-FEEDBACK comes in: consumers actively dis- brings personalization to search results, by allowing us- closing their purchasing intentions and reaching out to their ers to ‘+1’ results. These are then shared with an indi- friends and contacts for personalized feedback. vidual’s Google contacts, and highlighted in their search results. Google’s stated aim for the project: enabling Some indicators: users to help each other out in choosing the best and most relevant results. • Product recommendations from family (63%) and friends (31%) are the most trusted. However 81% of US con-* Privacy concerns are of course the elephant in the room here. sumers now go online to do additional research, withEnsuring that consumers maintain control and choice over when 55% looking for user reviews, and 10% soliciting adviceand where their information ends up is one of the big challenges from their social networks. However amongst peoplefor brands. But that’s for another brieﬁng. In the meantime, check aged 25-34, this ﬁgure rises to 23%. (Source: Cone Inc,out the Wall Street Journal’s excellent (if scary) What They Know June 2010)feature. • 90% of people trust the recommendations of their Face- book friends (Source: ExactTarget, August 2010) • 31% of daily Twitter users ask their followers for opin- ions about products and services. (Source: Edison Re- search & Arbitron Internet, April 2010) One more key driver here: with more and more consumers in- creasingly viewing their online reputation as something to en- hance as well as just protect, the quality of answers on Q&A serv- ices is rapidly improving. Some examples:You are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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order to receive feedback from their community of trusted advisors. • Online price comparison site Twenga launched a feature in April 2011 that allowed users to instantly pose ques- tions to their social networks. Due to the continued spread of smartphones, F-FEEDBACK can happen in real-time too: • Facebook Questions was recently redesigned to focus on helping people ask their friends (rather than the whole Facebook community). • Sites such as StackExchange and Quora allow users to follow topics and other users, building detailed data- bases of questions and answers that are tagged and • MyShopanion and Scandit are just two iPhone apps publicly searchable. that allow consumers to scan items while out shopping and not only see online reviews but get instant feedback • LoveThis is a user review website for people to write via Facebook and Twitter. tips and recommendations to share among friends on their network. • Travel Q&A sites Gogobot and Hotel Me are trying to bridge the gap between known friends (who are trusted but may not have the answer) and wider audiences.There are also a whole host of sites for consumers who want tipsand recommendations about which products and services to pur-chase, rather than more general Q&A: Check out these examples of how friends can now come into the ﬁtting room ;-) • The Tweet Mirror enables customers to send snaps of themselves to friends and followers directly from the ﬁtting room. • Visa’s RightCliq is an online shopping tool that enables consumers to save potential purchases in their ‘Wishs- • In Spain, Diesel hooked up cameras in their stores to pace’, which can be shared with friends for feedback. Facebook, allowing customers to post photos of them- selves trying on clothes to their proﬁles for instant feed- • Shopsocial.ly offers consumers a platform to connect back from their friends. with their friends and others who wish to share product recommendations or purchases. The website enables • From September to November 2010, Macy’s Magic users to shout out a question regarding a product in Fitting Room enabled shoppers at the brand’s New YorkYou are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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ﬂagship store to virtually ‘try on’ items via an augmented reality ‘mirror’ and then post the results to Facebook. • Go Try It On takes this concept one step further, by pro- viding a platform for users to ask not just their friends for feedback, but the site’s community for their opinions on their outﬁts.More and more online consumers are also sharing and discussingpotential purchases with their friends in real-time: While group-buying platforms such as Groupon are revolutioniz- • WetSeal, the US fashion retailer, has a ‘Shop With ing local retail (see our PRICING PANDEMONIUM trend), con- Friends’ feature, similar to toy retailer Mattel’s ShopTo- sumers usually don’t actually know the other members of the gether group that they’re buying with. So, while consumers get to lever- age the power of the web to beneﬁt from better deals, the actual • Shop With Your Friends, a Dutch startup has devel- shopping experience frequently lacks the F-FACTOR. Consum- oped a tool that enables consumers to shop online to- ers, of course, have strong incentives to share certain purchases, gether in real-time. especially for F-FACTOR-friendly experiences such as buying event tickets: what’s not to like about automatically inviting • Quorus Discuss is a plugin that any online vendor can friends to a concert or movie right after purchasing a ticket? install that allows users to chat and discuss products with friends. • 83% of consumers state that they tell their friends if they get a good deal. (Source: JWT Intelligence, December • In November 2010, Cisco encouraged consumers to use 2010) their WebEx tool to share their desktops with friends on Cyber Monday, the post-Thanksgiving day when many • Facebook announced in April 2011 that every time a US retailers launch online promotions. user posts on Facebook about buying a ticket from Ticketmaster, the company estimates they receive an extra USD 5.30. (Source: New York Times, April 2011) • Eventbrite, the event ticketing site, found that users are 10 times more likely to share details of events they have bought tickets to (than those events they are still con- sidering whether to buy). The ticket sales generated by people who share details of purchased events are 20% higher than if they haven’t yet bought tickets. The site estimates that the value of a Facebook share is USD 2.53. (Source: Eventbrite, March 2011)You are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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So, expect to see more tools that help consumers easily share The F-FACTOR also makes possible personalized products andand co-ordinate relevant purchases with their close friends and services based on the activities and output of one’s social net-family, but for now we’ll just highlight a few: work: • Disney’s Tickets Together Facebook app enables users • Flipboard is an app that integrates tweets and updates to buy theater tickets directly from Facebook, posts de- into a single, personalized online magazine. Launched in tails of the screening on a user’s wall and enables them July 2010, the free app automatically creates a magazine to invite friends to buy tickets. from the users social content, letting readers quickly ﬂip through the latest stories, photos and updates from • Indian consumers can do something similar with ticket friends and trusted sources. Links and images are ren- site BookMyShow’s Ticket Buddy Facebook app. dered right in the digital magazine, so users no longer have to scan long lists of posts and click on link after • Ebay’s Group Gifts feature, launched in November link; instead, they instantly see all the stories, comments 2010, allows users to invite friends to split the cost of a and images in one place. gift. The application integrates with Facebook to allow friends to be privately invited, while information from the • March 2011 saw the launch of LinkedIn Today, a so- recipient’s proﬁle can even be used to suggest suitable cially curated news homepage for users that rounds up gifts. the stories and links that are being read, shared and discussed by a user’s network. • Newsle is a tool that launched in public beta in April 2011 that alerts users to public news articles about members of their social networks from Facebook and LinkedIn. • ‘Personal search engine’ Greplin launched publicly in February 2011. The search engine scans across a users personal and social accounts including: Gmail, Face- book, Twitter and Google Docs, enabling users to locate any desired information that may be scattered across their social media network, whenever they want it. • US based PostPost, launched in December 2010, is a free application that turns ones Facebook page into aYou are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)

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digital newspaper. Users connect the application via the PostPost site, which enables it to link to Facebook and create a presentation of their news feed in the traditional format of a newspaper. With the F-FACTOR a growing force in the consumption arena, ultimately the only way for brands to succeed is to be liked (liter- ally ;-) if not loved, and this liking and loving comes from superior performance. In that sense, the Perform or Perish theme is stronger than ever, and underscores that while the F-FACTOR is currently playing out in the online arena ﬁrst and foremost, this is in the end about business at large. The F-FACTOR is about being so exceptional that consumers willOh, and check out these very ‘sign of the times’ F-ME examples ﬁnd and ultimately choose you, without you as a brand having toof consumers literally turning their friends and followers into ac- do anything extra. It’s not about bribing or even compelling peo-tual physical products and services: ple to “Like” your Facebook page. This is something of course, which brands that truly have the F-FACTOR don’t have to worry • Twournal enables users of Twitter to transform their about. tweets and pictures into a real-life published journal. In So, for all ‘F-entrepreneurs, this space is still wide open: simply addition to creating their own books, users can also buy and sell publications from other users. come up with new tools and platforms that help consumers help each other to discover, discuss and buy the best of the best. For • US based CrowdedInk offers an app that allows users B2C brands, its time to deliver innovations, products, campaigns to generate mugs ﬁlled with pictures of their Facebook and experiences that truly have the F-FACTOR. friends or Twitter followers. Users only need to enter their username and a preview of the mug is automati- In the meantime we’re working hard on our June Trend Brieﬁng, cally generated in minutes. which will cover a dozen ‘mini-trends’ dying to be applied straight away. Do tell your friends and followers ;-) • Social Print Studio can provide the analogue equivalent to the online album. The site creates posters generated from Facebook friends’ proﬁle pictures, Facebook photo albums, Twitter followers, and even Tumblr accounts. • Kunst Buzz, a Dutch art company has started producing Twitter art where users’ tweets make up their portrait.You are reading a PDF version of “THE F-FACTOR” (www.trendwatching.com/trends/ffactor)